On Line Schemes 12422 Essay Example

ventured onto the internet, it is evident that numerous websites have been transformed into commercial platforms by bulletin boards and discussion groups dedicated to providing investment advice, tips, and solicitations.

According to a regulatory agency, over 5,600 new investment-related messages were recently posted on the Prodigy service. These messages covered a wide range of topics and were posted in 969 different areas. Many of the messages promote brokers, investment advisers, financial newsletters, and specific investment deals. While some messages offer general stock-picking advice, investment possibilities, and tips on specific stocks, others promote moneymaking enterprises and service providers. The Missouri Securities Division and the New Jersey Bureau of Securities have taken the first regulatory actions against online investment schemes in the U.S., announcing these actions on June 30, 1994. Several other states are currently investigating suspected investment fraud and abuse in cyberspace.

As part of the "Electronic Message" scheme, a man from San Antonio and at least nine other individuals across the U.S. promoted a way for investors to "make big money from your home computer." The New Jersey Bureau of Securities filed a cease-and-desist action on June 30, 1994, stating that participants could earn a return of $60,000 in just three to six weeks by exchanging $5. The promoter utilized an "e-mail chain letter" approach, instructing participants to send $1 to five people listed online.

The individuals who sent money were obligated to include their own name on the list and publicly explain the scheme on ten different computer bulletin board sites. This scheme was essentially an advanced version of the illegal pyramid scam, which is prohibited by federal and state laws. Just as dishonest investment con artists

quickly took advantage of mail and telephone to deceive numerous unsuspecting investors, scammers are now exploiting cyberspace. While many users on investment-related bulletin boards only want to discuss specific stocks and share general financial advice, there is increasing evidence that a questionable group of people are using the online world to deceitfully and abusively enrich themselves. State securities regulators have identified several significant issues with investment schemes in the online world today, including manipulation of low-volume stocks. Most commercial bulletin board services allow users to post messages under fake names or multiple fake names.

Subscribers cannot verify the true identity of the person sending the message. The scammers manipulate stock prices by using puffery, speculation, and exaggerated claims about upcoming announcements, product advancements, and new contracts. This entices unsuspecting investors to buy shares, causing the stock price to increase. Investment fraud is facilitated by unlicensed brokers/investment advisors, fraudulent promoters with undisclosed interests, and the anonymity of cyberspace. Certain fraudulent investment schemes have been circulating for a long time.

But the online world has provided con artists with a significant advantage in victimizing unsuspecting individuals. It is crucial to acknowledge that there will never be enough enforcement measures to completely eliminate fraud and abuse in the online realm. While state securities agencies and investment regulators have made notable efforts to combat cyber-fraud, the reality remains that there are countless opportunities for swindlers to establish fraudulent operations.

Footnotes

1. Kelly, K. "Cyberpunks, E-money, and the Technologies of Disconnection." Whole Earth Review, Summer 1993: p.43
2. Ibid
3. Markoff, J. "Hacker Indicted on Spy Charges." New York Times, December 8, 1996: p. 13
4. Perry, L. Computer Crime. New York: Franklin Watts, 1997
5. Parker, D.B. Fighting Computer Crime. New York:

Scribers, 1997

Computer Crime. New York: Franklin Watts, 1997
"Security Survey Reveals." PC User, April 21, 1993: p. 20